Mortgage Debt Hindering Retirement Planning: BMO Study

Posted: May 17, 2012 at 1:17 am

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TORONTO, ONTARIO--(Marketwire -05/16/12)- BMO Financial Group released a study today indicating that many Canadian homeowners are feeling the pinch of balancing mortgage responsibilities with saving for retirement.

The survey, conducted by Leger Marketing, found the following:

"Paying off your mortgage prior to entering retirement is very important, because it will eliminate a significant amount of debt and keep you from having to manage higher debt loads after you stop working," said Tina Di Vito, Head, BMO Retirement Institute. "When you are no longer receiving employment income, it makes it much harder to let go of large amounts of money."

While saving for retirement and paying off a mortgage can often become competing priorities, many experts recommend finding a balance between both but placing extra focus on paying off a mortgage first.

"If your retirement is only a few years away, it is wise to try and pay off your mortgage before you enter retirement," said Laura Parsons, Mortgage Expert, BMO Bank of Montreal. "On the other end of the spectrum, for younger Canadians entering homeownership, it's important to consider options that will ensure mortgage debt can be paid down faster and well before their retirement years."

Ms. Parsons added that choosing a shorter amortization and taking advantage of pre-payment privileges where possible is one way to achieve a mortgage-free retirement.

"If you're buying a home at the age of 30, the difference between paying off your mortgage at 55 instead of 60 can have a significant financial impact on your retirement picture," said Ms. Parsons.

Regionally, the survey revealed:

Trying to pay down your mortgage faster? BMO provides the following advice:

Choose a shorter amortization: Choose a mortgage with a shorter amortization, which allows you to build equity in your home. A shorter amortization will help you pay less in total interest, protect against the possibility of rising interest rates and help secure a debt-free retirement.

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Mortgage Debt Hindering Retirement Planning: BMO Study

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May 17th, 2012 at 1:17 am

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